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BAROMETRIC METHOD

By-

ANKIT JAISWAL

ANJUM FATIMA

ANJANA

ANIL KUMAR

ANSHITA SRIVASTAVA

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What is ARIMA Method?

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ARIMA Method we can also called BOX-JENKIN TECHNIQUE .

Box-Jenkins method of forecasting is used for short term predictions.

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What is BAROMETRIC METHOD ?

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Techniques of Demand Forecasting

DEMAND FORCASTING

STATISTICAL Method SURVEY METHOD

Trand projection

Baromatric Method

Econometric Method

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BAROMETRIC METHOD

The basic approach of barometer technique is to construct an index of relevant economic indicators and to forecast future trends on the basis of movements in the index of economic indicators.

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The indicators used in Barometric Method

• Leading indicators

• Coincidental indicators

• Lagging indicators

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Leading indicatorsconsists of indicators which move up and down

ahead of some other series.

E.g. => (i) index of net business formation:

(ii) New building permits:

(iii) New orders for durable goods:

(iv) Corporate profit after tax, etc..

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Coincidental indicators The ones that move up and down

simultaneously with the level of economic activity.

E.g.=> (i) number of employees in the non- agricultural sector:

(ii) rate of unemployment:(iii) sales recorded by the manufacturing, trading

and the retail sectors etc.

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Lagging indicators Lagging indicators consists of those indicators

which follow a change after some time lag.

E.g. => (i) labour cost per unit of manufactured output:(ii) Out Standing loans:(iii) lending rate for short-term loans etc.

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BUSINESS CYCLELeading indicators precede(Lead) Business cycles’ Turning

points (i.e., peaks and troughs), coincident indicators move in step with business cycle, while lagging indicators

follow or lag turning points in business cycle.

Peak date Trough date

Leading indicatorCoincident indicatorLagging indicator

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Barometric Example

Development and allotment of land by Delhi Development Authority to

Group Housing Societies (a lead indicator) indicates higher demand prospects for cement, steel and other construction material (coincidental indicators) and increase in housing loan distribution (lagging indicators).

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DISADVANTAGE

At best , Barometric forecasting is only 80 to 90 percent accurate in forecasting turning poing.

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THANK YOU